Electric sports car back from the financial brink

Fears that the Tesla Roadster electric sports car had hit the skids because of the financial crisis have been eased by its billionaire founder and chief executive, Elon Musk. "I am personally standing behind delivering the cars and the deposits for the company," he said. The announcement came after the company failed to raise $100 million in further investment.

Musk, who became a billionaire after founding PayPal, said he would personally ensure that the San Jose, California, company would have enough cash to deliver all of its orders for the $109,000 Tesla Roadster, the first battery-powered sports car. "I have the means and wherewithal to do so. So people should have absolutely zero concern about their deposit."

Tesla has delivered fewer than 60 Roadsters despite having taken over 1200 orders. The company has taken deposits of between $5000 and $60,000 for those orders under a contract that specifies that the money can be used for Tesla's working capital, Musk said.

The Roadster has become something of an emblem for the green movement. It produces no carbon dioxide exhaust emissions, and even when the CO2 released in generating the electricity used to charge its batteries is factored in, it is responsible for less than half the amount emitted by the "greenest" petrol cars.

Generating electricity from renewable sources would cut the Tesla's CO2 footprint still further. And it's cheaper to run than a gasoline-powered car: Tesla estimates it costs less than 2 cents per kilometre. One kilometre in a conventional car with a fuel consumption of 9 litres per 100 kilometres (26 miles per US gallon), with gasoline at $3.60 per gallon, costs more than 8 cents.

Money trouble

But at $109,000 each the Roadsters are not cheap, and like more established car makers Tesla has been hit hard by the recent turmoil in financial markets as well as by cost overruns and production delays for the car.

When Tesla failed to secure a $100-million investment round earlier this month, Musk cut 24% of the company's workforce and delayed development work on a battery-powered electric sedan, known internally as the "Model S".

He also took the CEO post from Tesla's former chief executive, Ze'ev Drori.

"We didn't raise the $100 million but we still need to raise some money to get to cash flow positive," Musk said. "We actually probably only need in the order of $20 million to do that. We're going to raise more than that, but we only need about $20 million."

He added that the financing would come from existing investors in Tesla. "My expectation is next week is likely," Musk said when asked about the timing.

'Its a bit silly'

Musk was speaking after an apparently disgruntled Tesla employee posted a letter to a Silicon Valley blog that suggested Tesla was running out of funds after a financial briefing for employees this week.

"It's a bit silly. If we had almost no money in the bank then one could say that we are about to run out of money. But I think it's kind of silly to say that with $9 million in the bank," said Musk, who also co-founded the SpaceX rocket company that had its first successful launch to orbit last month.

In addition to the new financing round from investors, Tesla also expects to secure another $200 million in pending loans from the US Department of Energy.

The company is counting on the taxpayer-backed loans to offset up to 80% of the development cost of the Model S. Tesla has said it expects that car to cost $60,000 and compete against the likes of the BMW 5 Series for luxury and performance.

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